Tax collections down in first 4 months of yearTaxes collected in the first four months of the year are down from the same period in 2018, just as the government is on the cusp of opening the fiscal floodgates to boost economic growth.
The tax take in April was good, according to data released by the Ministry of Economy and Finance on Tuesday. During that month, the total collected came in at 31.4 trillion won ($26.58 billion won). That is up 1.3 percent from the same period a year earlier.
Most of the increase came from a boost in value-added tax (VAT) receipts. Corporate tax and income tax were flat.
VAT in April was 17.1 trillion won, up 4.9 percent from the same period in 2018. In part, this was a result of higher imports - up 2.6 percent - and lower exports, which resulted in a fall in refunds.
Taxes on transportation, energy and the environment fell 3 percent year on year as the government lowered taxation on fuels in November last year.
From January to April, total taxes collected were 109.4 trillion won, down 0.45 percent from a year earlier.
The government is behind schedule in terms of revenue.
Taxes collected so far equal 37 percent of this year’s target. That’s 3.8 percentage points lower than in the same period a year earlier.
In terms of the corporate tax, the government was only able to hit 32.6 percent of its goal, which is 5.8 percentage points lower than at the same point a year ago. This indicates that businesses haven’t been able to generate much profit and raises concerns about the economy.
The government was able to collect more in taxes as the nominal income of workers increased. Yet trouble in the property market led to a fall in the capital gains taxes.
While the government struggles to rake in more, spending has gone up.
In the first four months of the year, total spending grew 27 trillion won, to 196.7 trillion won, a near 16-percent on-year increase.
In April alone, the government spent 58.4 trillion won, a 46.7-percent surge compared to the year earlier period.
The Finance Ministry said the increase in spending was largely the result of aggressive fiscal management aimed at revitalizing the economy.
The operating deficit in the first four months of this year totaled 38.8 trillion won, 25.2 trillion won larger than the same period last year, which translates to a 185-percent surge.
The operating balance is the difference between taxation and spending minus social spending, which includes the national pension fund and the employment insurance fund.
This deficit may expand in the second half, as the government has recently been emphasizing spending to turn around the weakening economy.
President Moon Jae-in in May questioned whether it was necessary to keep the debt-to-gross domestic product (GDP) ratio under 40 percent, and ordered the government to be more aggressive in spending.
The ministry said in a statement that amid growing external and internal uncertainties, it will continue to strengthen its monitoring of the economic situation.
It added that it will support the strengthening of the economy through aggressive fiscal management and support for jobs and innovative growth.
BY LEE HO-JEONG [firstname.lastname@example.org]
More in Economy
Gangbuk beats Gangnam
600,000 jobs added last year, but many public or welfare
Consumer price gains pick up speed in November
Life expectancy up 7 months for Koreans born in 2019
OECD knocks tenth of a point off Korea's 2020 growth